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Goldman cuts Li Ning (02331) to HK$7.7; "buy"
 Goldman Sachs lowered its target price for Li
Ning Co. (02331) to HK$7.7 from HK$8 on its latest NI forecasts and updated RMB/HKD FX 
rate to 1.24, and reiterated its "buy" rating (on conviction list).
  The research house revised down its 2018-19 net income forecast for Li Ning by 9% to 
factor in higher employee expenses, mainly coming from restricted shares/share options and
investments in store upgrade/brand building.
  But Goldman believes sales growth is on track for q-o-q improvement, supported by
healthy sportswear demand, favorable weather conditions, and management's efforts to 
improve operating efficiency and inventory management.
  Goldman likes Li Ning for its turnaround story in a healthy sportswear demand growth 
environment. With 2.5 year of turnaround track record and further margin upside due to 
better channel mix, operational efficiency improvement, and healthy sales growth,
valuation of 18x/13x 2018/19 P/E does not look demanding given estimated 38%/38% NI growth
in 2018/19, the research house added.

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